I’ve been given a Settlement Agreement by my employer – what is it?

A Settlement Agreement is an agreement between an employer and an employee in which you are asked to settle your employment claims.

Usually, the Agreement will record that your employment ends on a certain date, as part of the terms.

If you sign the Settlement Agreement, you will not be able to sue your employer for claims connected to your employment or its termination, for example, unfair dismissal, discrimination, notice pay claims etc.

In return for agreeing to give up those employment claims, your employer will normally offer you financial compensation under the Agreement.

Why has my employer offered me a Settlement Agreement?

Employers often offer Settlement Agreements because they are concerned that you may have employment claims and they want to avoid the cost, risk and management time spent in dealing with them.

Sometimes, employers offer Settlement Agreements even when there are not any claims, at the time. For example, employees frequently seek advice about Agreements which are presented to them because their employer does not want to go through, say, a redundancy consultation or a disciplinary procedure.

Can I ask my employer for a Settlement Agreement?

Yes, you can ask your employer if they would be prepared to offer you a Settlement Agreement.

You would only usually ask your employer for a Settlement Agreement if you were prepared to leave your job and you thought that you had potential employment claims.

I can advise you about how to best approach your employer or I can do so, on your behalf.

Why would I ask my employer for a Settlement Agreement?

You might want to consider asking your employer if a Settlement Agreement could be offered if, for example:

• you have been told that you are being called to a disciplinary hearing and you are facing allegations which you believe will probably lead, rightly or wrongly, to your dismissal (particularly if there are allegations of gross misconduct) or
• you want to leave your job due to discrimination or other detrimental treatment by your employer or colleagues and you do not want to raise a grievance about it (or you are unhappy with a grievance outcome).

Do I need to get legal advice about the Settlement Agreement?

Yes, you are required to take legal advice and there are only certain individuals, including Solicitors, who are allowed to advise you about the terms of the Settlement Agreement; most people ask a Solicitor to advise.

I am a specialist Employment Solicitor and I have been advising on Settlement Agreements, as well as negotiating beneficial changes to them for employees, for over 20 years.

Your employer will almost always make a contribution towards the cost of the legal advice which they require you to take.

Do I have to sign a Settlement Agreement?

No, you are not obliged to sign a Settlement Agreement; however, there may be repercussions, if you do not sign.

For example, the employer may then proceed with a performance, long-term sickness or disciplinary procedure against you, where relevant. You would therefore need to weigh up whether it would be in your interests to decline an Agreement and I can help you make that decision.

Can I negotiate the terms of a Settlement Agreement?

Yes, you can negotiate the terms of a Settlement Agreement.

The most important part of the Settlement Agreement tends to be the terms about the financial compensation which you would receive. I would advise you whether this would be a reasonable sum in relation to the potential value of your claims.

With regard to other terms of the Agreement, it is worth bearing in mind that as they are drafted on behalf of the employer, they are usually strongly in the employer’s favour. It is important for you to understand which clauses are standard and which should be disputed.

As part of advising you about the terms of the Agreement, I would consider whether there are any negotiations on the terms which you might want to be carried out, including possibly asking for an enhanced financial package. I can seek to negotiate improvements on your behalf or you could carry out your own negotiations with your employer, if you preferred.

What are the advantages of signing a Settlement Agreement?

If you sign a Settlement Agreement, it will bring to an end the issues which you may be facing, for example a potential or actual dismissal or an in-depth grievance.

It will almost always be quicker, cheaper and less stressful to settle claims under a Settlement Agreement than if you were to bring an Employment Tribunal case.

In addition, the terms will usually include: an agreed reference; an agreement that neither party talks about the circumstances leading up to the end of employment (nor the agreement/its terms) and that neither party will make derogatory comments about the other. This can help both parties to move forward from any difficult employment situation, on a positive basis.

What are the disadvantages of signing a Settlement Agreement?

In most instances, you will be required to agree to the ending of your employment under the Agreement. However, quite often, by the time that a Settlement Agreement is offered, employees are unhappy with their work situation and are happy to exit.

Obviously, after signing the Agreement, you would not be able to litigate your claims but I would advise you beforehand about the suitability of the Agreement.

Can I ask Julia Woodhouse, Settlement Agreement Solicitor – Leamington Spa, Warwick and Salfordto advise me?

Yes, I will be pleased to help you. I have extensive experience in advising on and negotiating Settlement Agreements. I will work with you towards achieving a fair and reasonable Settlement which also allows you to start the next chapter of your working life, with confidence.

Please contact Julia on 01926 831231 or email her at [email protected] 

Julia is an Employment Solicitor based in Leamington Spa and advises clients across Leamington Spa, Warwick, Kenilworth, Coventry, Rugby, Nuneaton, Atherstone and further afield.

 

This article does not provide you with legal advice.